Changes Aim to Strengthen Military Health System

By Cheryl Pellerin
American Forces Press Service

POSTED:March 2, 2012 4:21 p.m.

WASHINGTON, March 2, 2012 - A proposed new governance structure will make the military health system more effective and produce savings, and the system's 9.8 million beneficiaries worldwide will never miss an appointment, the Pentagon's top health affairs official said.

In a Feb. 24 interview with the Pentagon Channel and American Forces Press service, Dr. Jonathan Woodson, assistant secretary of defense for health affairs and director of the TRICARE Management Activity, discussed three governance reforms under way for the military health system.

Woodson, a vascular surgeon, said it's been a transformative decade for the nation and the Defense Department.

"Our defense health program budget was about $19 billion in 2001, [and] this year's budget is about $53 billion," he said. "So we clearly need to not only focus on accessing quality care, but [also on] producing value for the amount of money we're spending on health care."

As the health care budget grows and the Defense Department's top-line budget shrinks, Woodson added, "a natural tension is created in terms of being able to train, man and equip the force, yet provide for quality health care." He said everything possible must be done to reduce costs in the military health care system before adjusting fees for medical services.

The effort began in June, Woodson said, when then-Deputy Defense Secretary William J. Lynn III established an internal task force to review the military health system's governance. The task force reported back in September, evaluating health system governance options as well as options for the governance of multiservice medical markets and of the national capital region's health system.

Based on the report and on consultations with the services' top civilian and military leaders, the chairman of the Joint Chiefs of Staff and other senior Defense Department officials, the current deputy defense secretary, Ashton B. Carter, now has directed that three reforms be instituted in the military health system.

One involves creating a defense health agency to take on the functions of the TRICARE Management Activity and assume responsibility for implementing shared services across the system. TRICARE is the civilian care component of the military health system.

"One of the things we looked at is whether new MHS governance could produce greater efficiencies and savings," Woodson said. The main structure being proposed, called the Defense Health Agency, "looks to do a better job administering what we call shared services," he added.

"Right now we have essentially three administrative structures -- the Army, Navy and Air Force -- that run health services," the Defense Department's top doctor explained. "The thought is that we would combine functions that are common to the services, and thereby produce savings."

He cited health information technology as an example, noting that it is extraordinarily costly and is common to all of the services. "There [is] no reason why the services should develop their own products," Woodson said. "This can be done in a shared fashion and produce savings." Other common areas, he added, are medical education for physicians, nurses, medics and pharmacists, and medical logistics.

Another proposed reform will establish market managers for multiservice medical markets, except for the national capital region. The managers' enhanced authorities will allow them to create and sustain a cost-effective, coordinated and high-quality health care system, Woodson said.

The third reform involves transferring responsibility for running military treatment facilities in and around Washington, D.C. -- including Walter Reed National Military Medical Center in Maryland and Fort Belvoir Community Hospital in Virginia -- to a national capital region directorate within the new Defense Health Agency.

Carter also is establishing a planning team, Woodson said, with leadership nominated by the undersecretary of defense for personnel and readiness and Joint Chiefs Chairman Army Gen. Martin E. Dempsey, to ensure timely implementation of the governance plan after it's reviewed -- first by the Government Accountability Office and then by Congress.

Each organization has more than 100 days to review the proposal, so changes in the medical system's governance, if approved, probably would not be instituted until early next year, Woodson said.

"The whole idea is to look forward," he said, "understanding that we need to bend the curve of the health care budget to look at a governance structure that makes us more effective, more agile and adds value to the services and their ability to deliver high-quality care."